The Ministry of Finance yesterday reached a consensus with the nation’s nine major state-run banks to freeze credit to Ting Hsin International Group (頂新國際集團) and its affiliates, saying the group’s credit risk has increased following its involvement in the latest cooking oil scandal.
The ministry invited the presidents of the nine institutions to update it on their outstanding loans to the food conglomerate and its subsidiaries.
“Following the cooking oil scandal, state-run banks’ credit risk [exposure to Ting Hsin] group has been boosted significantly and a review of banks’ loan agreements with the group was necessary,” the ministry said in a statement after the meeting.
After the meeting, the financial institutions made a decision to refrain from providing new syndicated loans to Ting Hsin, while upholding four principles announced earlier by Minister of Finance Chang Sheng-ford (張盛和).
The principles mandate no extensions of existing loan agreements, withholding credit without guarantees, asking the group to provide guarantees on its non-guaranteed loans and raising the standards for guarantees on guaranteed loans, as well as increasing the interest rates on the group’s existing loans.
Last month, the ministry said the banks had about NT$21 billion (US$689 million) in loans to more than 30 foreign or domestic firms related to Ting Hsin, including Wei Chuan Foods Corp (味全食品) as well as the Wei (魏) family.
So far, the banks have called in some undue loans made to Ting Hsin Oil and Fat Industrial Co (頂新製油實業) and Cheng I Food Co Ltd (正義), with the total amount accounting for more than 60 percent of their total outstanding loans, when including recent claims paid off by the two companies, according to ministry data.
Meanwhile, more than half of the outstanding loans to Ting Hsin are due by the end of this year and state-run banks would not extend these lines of credit, the ministry added.
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